With natural gas prices on a downward slide and the Trump administration devoted to supporting the domestic fossil fuel industry, the fact that a solar power ETF has outperformed all other ETFs is surprising, to say the least (read: "
ETF Of The Week: Solar Fund Shines
").

Despite a rocky second half of 2018, the solar power sector has boomed since the start of the year, rising higher on the back of favorable trade moves.

On Friday, the U.S. Trade Representative
announced
that bifacial solar modules, or two-sided photovoltaic panels that can catch not just direct sunlight but reflected sunlight, were being removed from the list of U.S.-China tariffs.

The tariff exclusions are good news for international solar stocks, as bifacial panels are largely manufactured in China, not the U.S Companies like Canadian Solar and
JinkoSolar (JKS)
, a Chinese manufacturer, popped Friday on the news.

But dropping the tariffs is also good for domestic solar companies. Though U.S. manufacturers like
First Solar (FSLR)
have struggled for years to compete against a market flooded with cheap Chinese solar panels, the benefit of Trump's solar panel tariffs has proven limited, and the U.S. solar industry lost an estimated 18,000 jobs by the end of 2018.

The tariffs have also hurt domestic solar power installers, retailers and utilities, which compete not against Chinese companies but against the domestic fossil fuel industry. So lower demand from U.S.-based installers and utilities in turn depresses demand for domestic manufacturers' product. Therefore, lifting the tariffs should stoke demand across the solar power supply chain.

Lower Rates, Higher Oil Benefit Future Solar

Two other factors are lifting solar stocks higher.

First, the Fed has given indications it may lower benchmark interest rates this summer, making it cheaper for companies to engage in large capital expenditures. That would reduce the cost for utilities to build out or upgrade existing solar arrays, as well as make it easier for domestic solar manufacturers to expand their production capacity. It also improves how those projects are valued, long term.

Second, oil prices have risen 15% year to date, with additional increases looking likely, as rising U.S.-Iran tensions threaten supply. Historically, as oil prices rise, renewable power options look more attractive in comparison. That appears to be the case here as well.

Should these fundamentals continue to hold, investors in solar-dominated investments could be in for a spectacular 2019.